•  
  •  
 

Publication Date

1991

Abstract

The issue about disclosing contingent losses arising from lawsuits has been an accounting problem for decades. Prior to 1953, there was no mandate for recording or disclosing such contingencies. In this study, the 307 court cases brought against the Chicago, Rock Island and Pacific Railroad Company during 1903 and 1904 are analyzed to determine the impact of nondisclosure in the annual reports. Despite thirty-nine of these cases involved deaths and fifty concerned injuries to employees or passengers, the simple dollar amount of total litigation does not meet a threshold of materiality. Under current reporting requirements, however, some of these cases would have been disclosed. From the relative size of the amounts in dispute, it does not appear that nondisclosure of contingent losses from lawsuits were significant enough to mislead investors.

Share

COinS
 
 

To view the content in your browser, please download Adobe Reader or, alternately,
you may Download the file to your hard drive.

NOTE: The latest versions of Adobe Reader do not support viewing PDF files within Firefox on Mac OS and if you are using a modern (Intel) Mac, there is no official plugin for viewing PDF files within the browser window.